African economies will offer commercial real estate investors the greatest value creation known to man since Mansa Musa of Mali change the value of gold throughout the world through charity. By the United Nations estimates, the continent will grow to a $12T GDP by 2030 and see its current population of 1.2 billion will grow by 42 million by 2050. Africa is going through a construction boom building Mega cities from the ground up. Mega-projects across Africa are up 46% percent and is worth $326 Billion. Africa has a young population average age 18 years old, the fastest growing numbers of millionaires and a burgeoning middle class is a growth catalyst across a range of sectors, including financial services, telecommunications, retail, residential and transportation. Africa registered a 6 percent increase in FDI inflows in 2018 (US $ 40 billion, up from a revised US $38 billion in 2017) in that the relatively diversified economies, such as Egypt and South Africa, saw more stable and increasing FDI inflows,”Egypt led Africa with an increase of 7 percent from $7.4 billion to $7.9 billion. After the financial crisis cross border capital flow took dive by 40% in Africa as mature economies chose not to diversify and deploy capital abroad.

The African commercial real estate investment environment offers cheaper asset prices, devalued currencies and returns (18-22%) percent on moderately size investment opportunities. The investment environment brings challenges for global investors who need larger scale property investments — meaning managers who are risk-averse without an opportunistic slant to their portfolio allocations. For the larger investor one would need more diversified economies of scale, markets like Nigeria, South Africa and Egypt with infrastructure and greenfield projects. However, many of these markets face challenges mainly the challenges of capital controls, transparency, and market development.

Some of the larger private equity funds have chosen to partner with local based private equity firms. In the multifamily sector, we like Cytonn Investment of Nairobi Kenya a 1 billion dollar private equity firm headed by Edwin Dante who focus on real estate properties for high net worth investors. One of the rapidly developing asset classes is the hotel sector in Ghana and Kenya where Marriott is opening 30 new hotels by 2020. Hyatt is doubling its hotel portfolio in Africa while Raddison has 86 hotels, Accorr Hotels has more than 100 and has plans to invest another 1 billion. Ghana has recently unveiled a 15-year-long tourism plan that seeks to increase the annual number of tourists to Ghana from one million to eight million per year by 2027. Ghana’s travel industry is projected to raise $8.3 billion a year by 2027, plus associated benefits, according to the plan.

Dar Salaam Tanzania Africa

The primary asset class is infrastructure covering energy and power, transport, mining, water, real estate, health care, technology, media telecommunications oil, and gas. Kenya is also creating a tech city Konza Techno City which has been under development since 2013. It is 5000-acre business hub 70km outside of Nairobi Kenya the projected cost is $14.5 Billion. Africa offers tremendous infrastructure projects they include the Grand Renaissance Dam is under construction on the Blue Nile River in Ethiopia at $4.8B. The Mombasa-Kigali Railway project connecting 3 East African States. Morocco launches a $420 million urban development project Bouregreg Valley linking the towns of Rabat and Sale. One of 11 giant infrastructure projects is a series of roadways and railways spanning 6000 miles called the North-South Corridor for 1 billion dollars. Tanzania Bagomayo Port will become Africa’s largest port capable of handling millions of containers per year with an estimated cost of $11 billion built by the Chinese to be completed by 2045. The Grand Inga Dam will be the largest energy-generating body in the should be finished by 2025 at cost of 100 billion US dollars. Egypt is going ahead with its plans to build a multi-billion($45.B) new city near Cairo, which will become the country’s new capital. The scale of the plans certainly defies historical norms. If completed, the currently nameless city would span 700 sq km (a space almost as big as Singapore), house a park double the size of New York’s Central Park, and a theme park four times as big as Disneyland – all to be completed within five to seven years.

A large number of infrastructure construction projects should increase demand for the local logistics and warehouse space across the infrastructure and along the coastal ports of Africa. For example,Tanzania is key shipping port which will need vast meters of industrial space and is it seeking capital flow to become the Jebel Ali model of east Africa. While Nairobi is East Africa’s key trading hub, businesses operating in the region are demanding access to warehousing facilities that are able to offer operational and costs efficiency and safety and security. There is a unique investment opportunity for developers building logistics warehouses –the current logistics market is at a yield of 8.5%. The office and retail sector yields have fallen in 2018 from about 11% three years ago to about 8%, while residential property yields are now at 5.6%. We see logistics as a targeted asset class for an entry point and value sustainability, however, this vehicle would need a skilled developer partnership.

The route to investment in Africa is generally via real estate focused funds they invest across a range of markets to contain risk and maximize return value. The top three real estate private equity firms investing in Africa are Actis Real Estate Fund, Novara Real Estate Fund, and Helios Fund. TPG, KKR, Bain Capital, Colony Capital which bought the Abrajj PE platform. New York-based Blackstone Group is scaling back in Africa after less than 5 years after they tried to complete a top-down investment approach in Nigeria. Our favorite private equity firm for investment in Africa is Actis Investments fund managers they are socially environmentally responsible fund with 15 billion dollars in assets funded.

The commercial real estate market in Africa, like India, faces challenges for global fund managers- such as lack of financial integration and transparency, corruption, infrastructure challenges around delivering goods and services, most oil economies are in recession brought on by lower oil prices, which have slashed some government revenues, oil prices have weakened some countries currency and caused dollar shortages frustrating business and households. For the global fund manager, one would need people on the ground, with an original perception of the investment environment to create sustainable value to build performance and to exit. However, to create real value it will take vision and passion to see above the clouds, it is best to leave you with Bill Gates: states concerning Sub Saharan Africa “I believe that the right investments will unlock the continent’s enormous potential. Young Africans will shape the future of not only their own communities but the entire world.

The required structural reforms to achieve a wide range of policy goals tend to be very similar, whether the goal is to become attractive to a more diversified pool of investors (banks, pension funds, insurance companies, and other institutional investors), to enhance the economic impact of these capital flows, or to improve the resilience of a country’s developing financial system. Ultimately, a country’s financial integration into the global economy requires it to adopt and effectively implement global regulatory and disclosure standards and other “financial architecture” found among the developed countries 2019 is the year of implementation of Basel lll which should guide transitional economies to greater investment standards and capital flow.While guiding mature economies to greater portfolio diversification and stable real estate cycles.

The processing of removing friction from the capital flow and portfolio diversification is essential to successful global investing. But more importantly, China, India, Saudi Arabia, Indonesia, Africa, and emerging economies have the key components of both risk and value creation.


An empirically tests on home bias information asymmetries and learning global commercial real estate markets.—- found that foreign investors pay a premium of 3.6%, on average, relative to local investors for comparable properties in local markets. The premiums reflect information disadvantages of foreign investors, which are not correlated with the hiring of agents, anchoring to prices in their home market and selection bias. We show that learning from prior acquisition experience significantly reduces information disadvantages of foreign investors. Foreign investors could offset their initial disadvantages relative to the first-time local investors after four acquisition experiences in local markets. Quality of learning through more distant past acquisitions, acquisitions of real estate of the same type and in the same city could also reduce information asymmetries of foreign investors. However, we find that geographic proximity does not explain information asymmetries in cross-border investments experienced by foreign investors.Studies show that foreign investors avert risk when using debt when investing in markets where there maybe informational asymmetries. “The global investor may consider the debt approach which is based on non recourse loan therefore is does not give the home bias team the informational advantage in the same way that an equity investment does states (Mansoor). While others may use the opportunistic approach to global investing especially in countries evolving through the de-leveraging stage of the real estate investment cycle(China). In 2019- 2023 the global trend for capital flow will be operating through joint ventures from private equity and SWF’s investing to curb risk in Asia Pacific.